Citation: 2009TCC531
Date: 20091021
Docket: 2007-4544(IT)I
BETWEEN:
STEVEN P. ELCICH,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
V.A. Miller, J.
[1]
The issue in this
appeal is whether the Appellant is allowed to deduct the amounts of $21,109 and
$18,450 as spousal support in the 2004 and 2005 taxation years respectively.
[2]
The Appellant had a
similar appeal before this court for his 1998, 1999, 2000, 2001, 2002 and 2003
taxation years. That appeal was heard by Justice Bowie and it is from the
Reasons for Judgment in that appeal that I have gleaned the history of this
appeal.
[3]
Justice Bowie dismissed
the Appellant’s appeal and as a result, in 2004 and 2005, the Appellant did not
deduct those amounts which he now argues are spousal support payments and
should be deductible.
[4]
The Appellant and his
former common-law spouse had a child in 1985. The spousal relationship broke
down in 1997 and on April 2, 1997, The Honourable Madam Justice MacDonald of
the Ontario Court (General Division) ordered, on an interim interim basis, that
the Appellant pay support of $425 per week to his former common law spouse for
her and the child.
[5]
There were two further
Orders that were referred to me by the Appellant. On June 26, 1998, The
Honourable Mr. Justice Marshall of the Ontario Court made an Order; the portion
of that Order which is relevant to this proceeding is the following:
THIS COURT FURTHER ORDERS THAT Madam Justice MacDonald’s unallocated
support Order dated April 2, 1997 is varied and increased to $600.00 per week
retroactive to January 12, 1998.
[6]
On December 12, 2002,
The Honourable Mr. Justice Forestell ordered that the Appellant shall pay child
support in the amount of $600 per month and spousal support in the amount of
$500 per month.
[7]
At the conclusion of
the trial, Justice Forestell asked the parties to submit material that would
allow him to determine the amount of the arrears of child support. On April 25,
2003 he issued Reasons in which he determined that the total arrears of child
support payments were $54,100.65 plus interest of $3,083.35 for total arrears
of $57,184. There was a sum of $9,784.05 which had been held in trust and this
was credited against the arrears so that the balance of arrears was $47,400.
Justice Forestell made the following statement at the end of his deliberations:
It should be noted that the support order paid here and the arrears
are all child support pursuant to the terms of the Income Tax Act.
[8]
Prior to May 1997,
spouses who made payments to separated or ex-spouses for the support of
children could deduct the payments while the recipient had to include the
payments in income. This was the old regime of deduction and inclusion[1].
[9]
Justice MacDonald’s Order was made
under the old regime and the entire support amount was required to be included
in the common law spouse’s income and was deductible by the Appellant.
[10]
Pursuant to the
amendments to the Income Tax Act (the “Act”) which were effective the
end of April 1997, spousal support still had to be included in income by the
recipient and could be deducted by the payer. However, child support was
neither deductible nor includable when the payments were made “on or after a
commencement day”. “Commencement day” is defined in the Act and one of those
situations specified as a commencement day is the day on which a child support
amount is varied by a subsequent Order. For the purposes of this appeal, there
is a commencement day of January 12, 1998, which is the date when the first
payment of the varied amount provided for in the Order of Mr. Justice Marshal was
to be made.[2]
“Child support” is defined in the Act in subsection 56.1(4) as follows:
"child
support amount" means any support amount that is not identified in the
agreement or order under which it is receivable as being solely for the support
of a recipient who is a spouse or common-law partner or former spouse or
common-law partner of the payer or who is a parent of a child of whom the payer
is a legal parent.
[11]
In his Order, Mr. Justice Marshall
left the support amount unallocated. The result of not allocating an amount
between child support and spousal support is that the entire amount is treated
as child support in accordance with the definition of “child support” in the
Act.
[12]
It is the Appellant’s position
that a portion of the $600 per week support amount which was ordered by Mr.
Justice Marshall was really spousal support.
[13]
His agent argued that it was clear
from Madam Justice MacDonald’s Order that she intended the support to be both
spousal and child support. In varying the Order, Mr. Justice Marshall must have
had the intention to provide support for both the spouse and the child. The
agent argued that Mr. Justice Marshall’s Order was ambiguous and I can look at
extrinsic evidence to discern his true intention. However, the agent did not
refer me to any documents that allegedly showed his true intention. She did
state that there were no transcripts of the proceeding before Justice Marshall.
[14]
It is my opinion that there is no
ambiguity in Mr. Justice Marshall’s Order. He did not allocate the support amount
between spousal and child support and the entire amount is child support in
accordance with the Act.
[15]
Essentially this same decision was
made by Justice Bowie in the Appellant’s prior appeal. At paragraph 19 Justice
Bowie stated:
[19]
I am not unsympathetic to the Appellant's position in this case.
There is no doubt that the failure of Mr. Justice Marshall to allocate the
support payments between spousal and child support when he varied Justice
MacDonald's Order has operated to the considerable detriment of the Appellant
from a financial point of view. Exactly what took place in the action under
the Family Law Act of Ontario was a matter of some
evidence, but not strictly speaking, a matter into which this Court has any
right to inquire. Certain Orders were made, and I have to take those Orders at
face value. If they were wrongly made, and I do not purport to make any finding
one way or the other as to whether any of them were, the only place that a
remedy for that lies is in the Ontario Court of Appeal. Mr. Justice Marshall's
Order was appealed to the Court of Appeal. (emphasis added) That appeal was
abandoned, the Appellant says without his consent, by his lawyer acting without
instructions. I have no right to make any inquiry into that. It is far beyond
my jurisdiction to do so, and I do not pretend to make any finding with respect
to it. I would say only that there were remedies available that, had they been
pursued to their ultimate conclusion, might very well have left the Appellant
in a much more satisfactory position than he finds himself in today.
[16]
It is my opinion that by
describing the support amount as unallocated, Justice Marshall intended it to
be a child support amount.
[17]
For these reasons the appeal is
dismissed.
Signed at Ottawa, Canada, this 21st day of October 2009.
“V.A. Miller”
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